Token Advance in Resale Property Transactions
In resale property deals, the buying process typically goes: Token Advance → Agreement for Sale → Property Registration. Token advance is the very first step — paid before any detailed legal checks are complete, as a show of intent to buy at an agreed price.
Don't pay token before basic checks: Many buyers pay token advance in the excitement of finding the right flat — and discover title problems later. Do a basic check before token: (1) verify seller is the registered owner (EC + sale deed), (2) check for outstanding home loan (EC will show MODT), (3) verify no society dues outstanding. These take 30–60 minutes online.
Token Advance vs Booking Amount
| Factor | Token Advance | Booking Amount |
|---|---|---|
| Typically used for | Resale property — between buyer and seller directly | New property — paid to builder/developer |
| Amount | Small — ₹25,000 to ₹2 lakh typically | Larger — 5–10% of flat cost |
| RERA rules apply? | Not directly — private arrangement | Yes — RERA limits and refund rules apply |
| Document | Token receipt — simple | Booking form + official receipt with GST |
| Binding? | Morally binding; legally depends on receipt terms | Formally binding — part of official sales process |
What Your Token Receipt Must Include
Minimum Content of Token Advance Receipt
- Property details: Exact address, flat/house number, floor, total area
- Agreed sale price: Total consideration agreed between buyer and seller
- Token amount: Amount paid, date, and mode of payment
- Timeline: How many days buyer has to complete due diligence and sign sale agreement
- Refund conditions: What happens if seller backs out (return token) or buyer backs out (forfeiture)
- Both signatures: Signed by both buyer and seller — seller acknowledges receipt
Related Terms
Frequently Asked Questions
Token advance (also called token money or earnest money) is a small initial payment made by a buyer to signal serious intent to purchase and temporarily take the property off the market. Typically ₹25,000–₹2 lakh for resale transactions. It is followed by a formal agreement for sale and eventually the registered sale deed.
If the seller backs out after accepting token — the token amount is returned (sometimes doubled per prior agreement). If the buyer backs out — the token advance is typically forfeited by the seller. The exact refund terms should be specified in the token receipt. This is why getting refund conditions in writing before paying is important.
Keep it minimal — typically 1% of property value or ₹1–2 lakh maximum. A small token is enough to show serious intent; paying a large advance before completing due diligence and signing a formal agreement is risky. Never pay an amount you cannot afford to lose if the deal falls through.
Never pay token advance in cash — cash payments have no legal backing. Always pay via cheque, NEFT, or UPI and get a written, signed receipt. Without a paper trail, you cannot prove you paid if the seller later denies it or refuses to return the token advance. Cash token advance is also a red flag about the seller.
After token advance: (1) Buyer conducts detailed legal due diligence — title search, EC, outstanding loans, (2) Buyer secures home loan sanction letter, (3) Both parties sign a formal Agreement for Sale (AFS) with detailed terms, (4) Buyer applies for home loan — bank does property valuation, (5) Registration date fixed — full payment made and sale deed registered at Sub-Registrar.